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The effects of internationalisation on domestic labour demand by skills: Firm-level evidence for Belgium

Ludo Cuyvers (), Emmanuel Dhyne () and Reth Soeng ()
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Ludo Cuyvers: University of Antwerp
Reth Soeng: University of Antwerp, Steunpunt Buitenlands Beleid

No 206, Working Paper Research from National Bank of Belgium

Abstract: We empirically investigate the effects of the internationalisation of Belgian firms on domestic demand for production and non-production workers, which are used as proxies for unskilled and skilled labour. Distinction is made between home-employment effects of firms’ internationalisation, through either international trade or outward foreign direct investment, in highincome countries and in low-income economies. The results of our econometric analysis, using data over 1997-2007, suggest that increasing import shares from low-income countries or investing in those countries significantly reduces demand for low-skilled labour, while it increases demand for skilled labour. An increase in exports generally raises the demand for production workers, while it reduces the demand for non-production workers. However, these effects are reversed in the case of exports to low-income countries. Considering the impact of FDI, our results tentatively suggest that the setting up of a new international investment project has a positive impact on demand for non-production workers one period before it is made. This positive effect is offset in the long run, particularly in the case of investment in low-income countries.

Keywords: labour demand; international trade; outward FDI; skilled and unskilled labour (search for similar items in EconPapers)
JEL-codes: C23 F16 F21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-int and nep-lab
Date: 2010-10
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